U.S. federal court fines two Mexican firms $57M in forex case

CFTC says firm lost $19.4 million during period it claimed to make money

The U.S. Commodity Futures Trading Commission (CFTC) today announced that it obtained a federal court judgment against two Mexican companies, MXBK Group S.A. de C.V. (MXBK), and its forex division, MBFX S.A. (MBFX), requiring them jointly to pay restitution of $28,969,059 to defrauded U.S. customers and an equal amount as a civil monetary penalty. The Order, entered on March 7, 2013, by Chief Judge Ted Stewart of the U.S. District Court for the District of Utah, finds that MXBK and MBFX accepted at least $28 million from more than 800 U.S. customers to trade forex transactions in pooled accounts. The Order finds that MXBK and MBFX defrauded their customers, in part, by misrepresenting their historical trading results. The Order also finds that MXBK and MBFX willfully made, or caused to be made, false reports or statements to their customers regarding the profitability of their accounts.

Specifically, the Order finds, as was alleged in the CFTC’s complaint filed on December 1, 2010, that during the period from June 2008 through April 2009, MXBK and MBFX reported overall trading profits when, in fact, they lost approximately $19.4 million (see CFTC Press Release 5946-10).

The Order also imposes permanent trading and registration bans against MXBK and MBFX and prohibits them from violating the anti-fraud provisions of the Commodity Exchange Act, as charged.

The CFTC’s enforcement action arose from a joint CFTC cooperative enforcement investigation with the Federal Bureau of Investigation (FBI), the Internal Revenue Service (IRS), and the Securities and Exchange Commission (SEC). On November 30, 2010, the SEC filed a complementary action in the U.S. District Court for the District of Utah (SEC v. Oram), which alleged violations of U.S. securities laws by three U.S. residents alleged to be involved in the MXBK and MBFX enterprise. The SEC case has since settled. The CFTC thanks the FBI, IRS, and the SEC for their assistance.